Mark Zuckerberg and Xiaomi Inc CEO Lei Jun discussed a potential investment by Facebook in China's top smartphone maker ahead of its US$1.1 billion fundraising last month, but a deal never materialized, several people with knowledge of the matter said.

The discussions, at a private dinner when Zuckerberg visited Beijing in October, were never formalized, three of those people said, as the two CEOs weighed the political and commercial implications of Facebook buying into the Chinese tech star now valued at US$45 billion.

One individual with direct knowledge of Xiaomi's fundraising said the mooted Facebook investment was "not huge," but the talks underscore how ties between US and Chinese companies have deepened as China's tech industry matures.

A Facebook investment in Xiaomi would have raised the international profile of the popular handset maker dubbed "China's Apple" by its fans and linked it to a US social networking phenomenon with more than 1.3 billion users.

Facebook, for its part, has long harbored ambitions to expand into the world's most populous country, potentially with partners. One of the individuals said Facebook and Xiaomi began discussing a possible investment in mid-2014.

Two of the people said Xiaomi feared a tie-up with Facebook could threaten its relationship with Google Inc, a crucial business partner. Xiaomi's phones are built on Google's Android operating system.

Facebook declined to comment for this article.

Posting on the Weibo microblog yesterday, Lin Bin, Xiaomi's president and co-founder, said the Chinese firm maintains good relations with Facebook and never rejected an investment from the US company. Xiaomi said it would not otherwise comment on the matter.

Lin neither confirmed nor denied the talks took place.

"This report is gravely mistaken. Xiaomi maintains friendly relations with all its partners, including Facebook. Lei Jun, (vice president of international operations) Hugo Barra and I and Zuckerberg and other Facebook officials all have very good relationships. We've never rejected an investment or feared Google."

Zuckerberg has eyed China as a critical piece of his vision to connect the global population.

Xiaomi ultimately announced last month that it raised US$1.1 billion from investors including Hong Kong-based tech fund All Stars Investment; DST Global, a private equity firm that has invested in Facebook and Alibaba Group; Singapore sovereign wealth fund GIC; Chinese fund Hopu Management; and Alibaba founder Jack Ma's Yunfeng Capital.

Go to Forum >>0 Comment(s)